O2O Business Model: The Key to Growing Your Retail Business

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E-commerce business is on the rise and is expected to grow faster than ever with the world still under the impact of the pandemic. E-retail sales alone accounted for almost 18% of the total retail sales worldwide in the year 2020 and are predicted to reach 21.8% by 2024. [1]

While offline to online e-commerce sales are bringing in huge profits to businesses, yet, nearly a major share of merchants say that 80% of main revenue still comes from offline sales. Moreover, half of the consumers still prefer shopping from physical stores rather than purchasing online, according to the State of Consumer Behavior 2021.[2] This is how the O2O concept was born.

But, before we go any further, let us first understand what the concept of O2O retail is.

What is the O2O business model like?

O2O or online-to-offline retail is a marketing technique that involves directing potential customers from online platforms to actual stores to complete a purchase. It can drive customers to a brick-and-mortar store using channels such as emails, Instagram and internet marketing. In addition, in O2O commerce, the selling channels complement instead of competing with each other, enabling merchants to highlight their channel’s strengths while also supporting their flaws.

Benefits of the O2O business model

1. Increases sales

Statistics show that while online e-commerce is gaining immense popularity, physical stores are still experiencing more sales. According to a survey report from the State of Consumer Behaviour 2021, 46% of respondents voted in favour of in-store shopping[3] because coming to a store helped them see and feel the products to decide if that’s what they wanted. Moreover, customers are more likely to spend extra when they are in a store. For example, if a person decides to buy a pen, then they may spend a little extra to purchase other stationery products when in a store.

2. Improves customer reach

Merchants who primarily focus on their brick-and-mortar usually find it difficult to expand their customer base and also boost their brand awareness. So naturally, people who aren’t within their neighbourhood wouldn’t know about their business. But, when retailers shift to the online space, it opens multiple opportunities for their sales. By advertising, email marketing and social media awareness, they can conquer their geographical limitations and reach out to several potential customers.

O2O omnichannel strategy is an excellent way to attract customers in this case. For example, say a customer contacts a brand online about a specific product and then walks in the store to see it. At that moment, the merchant can immediately show them the exact product. This is one of the most common examples of O2O and omnichannel integration.

3. Provides customer insights

Even if a customer visits your store's website but does not make a purchase, their information is captured and transformed into leads. Traditional retailers, on the other hand, who don’t have a website will only see the consumer leave without understanding why. Thus, in having an online store, you can use the collected data from your shoppers to gain useful insights and execute marketing campaigns that improve customer engagement.


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How to implement O2O strategies for your retail business?

1. Shift to a Buy online, pick-up in-store method

Buy online, pickup in-store (BOPIS) is a popular shopping method that can drive online customers to their physical stores. Customers can browse a company's website for products, buy the ones they prefer and be notified when their order is available to pick up at their local store. Customers may collect their things whenever they like and inspect the quality immediately in the store, making it incredibly easy for them. It’s a very convenient method for shoppers as well as for businesses, as merchants can use this opportunity to invite customers to purchase other items like mentioned above. 

2. In-store returns

Let us say that you have purchased an item online and are unhappy with it on its arrival. You figure out that there is a store location near you and you decide to return it over there. But, you return disappointed because the assistant tells you that they don’t accept online returns. These kinds of experiences add needless complexity to the customer experience, making customers wonder if they want to buy from that store again.

With in-store returns, the returns procedure is made easier for you and your customer. It’s because both returns and refunds happen simultaneously, enabling you to get products back into stock faster. At DHL, we understand the importance of reverse logistics and help in a hassle-free shipment return system by allowing you to create a return AWB. That way, if the recipient decides to return their package, all they have to do is contact our customer service representatives to schedule a pickup, and we'll take care of returning the item to you.

3.  Home delivery

While BOPIS is excellent, some customers still prefer their products getting delivered at home rather than a pick up in-store option. To tackle this problem, partnering with logistics providers like DHL and having them deliver the purchased items to customers is also a great solution.

We take the utmost pride in fulfilling our deliveries right on time and at the customer’s chosen time and place. Being a trusted courier service, we not only support your businesses in reaching out to overseas customers, but also give you direct door-to-door access to international markets. Our in-house specialists make sure that your last-mile delivery services are completed without any hassle, by keeping the customer’s convenience in top priority.

For the success of any business, it is critical to make the customer journey as seamless and integrated as possible. So, by adopting an online to offline retail model, you can keep your customers satisfied, drive them to your store and also boost your profits.

So, are you ready to embrace the O2O business model?